Chicago IL USA Thursday PM January 7, 2010
Editors, The Financial Times
The Financial Times letter “Treat people fairly and they're more likely to pay taxes” (Thursday, January 7) makes excellent, sincere points. But the main problem in the US could be that so few people are paying taxes with checks drawn on their personal accounts.
In 2007, the federal government took in a total of $2.692 trillion, 62% of which was withheld from wages (2009 Statistical Abstract of US, table #462.) So nearly 2/3 of all the actual dollars that came into the US general fund were from employer bank accounts, not employee's.
Employers pass all this on to customers in higher prices, resulting in almost 2/3 of federal income coming from an invisible national sales tax. This hoax has been going on since the 1943 Current Tax Payment Act, but a regularly expanding national economy makes it painless to voters.
This problem could be corrected by changing paragraph 3402 of USC Title 26 — 'Internal Revenue Code' Subtitle C 'Employment taxes' Chapter 24 'Collection Of Income Tax At Source On Wages'... from "every employer making payment of wages shall deduct and withhold upon such wages a tax..." to "every employer making payment of wages shall pay all of those wages to the employee...." The employer would still calculate the tax, replacing the reassuring (but thoroly misleading) note "you earned and your employer paid" with "here is what the feds are expecting from you within 30 days"
Would this be inefficient? Certainly for an insatiable federal bureaucracy. But writing a check on their personal bank accounts to the Federal Government every month for 20% of their take-home pay would give citizens all the incentive needed to vote for politicians they feel most likely to treat them fairly.
Arnold H Nelson 5056 North Marine Drive Chicago IL 60640 USA firstname.lastname@example.org